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Retirement strategies, part two

Posted: December 1, 2008 8:19 p.m.
Updated: December 2, 2008 4:55 a.m.
As a follow up to the previous article about couples' retirement strategies, following are some points in planning and protecting your retirement plans should you wish to consider variable annuities and their special income guarantees not offered by any other investment.

Thanks to her longer life, a wife will need to plan for what happens after her husband's death. Because of reduced pension payments or even loss of wages, you want to be sure the surviving spouse doesn't outlive the money.

Optional living benefits offered through variable annuities make it possible to invest in a mix of investment portfolios containing equity and debt securities, such as bonds, and benefit from a variety of available guarantees that can protect your investment against market losses or guarantee lifelong income.
By guaranteeing your underlying investments, you can have the confidence to take prudent investment risks, taking advantage of market upswings and protection from any downturns.

Many couples seem to think that the only investment risk is losing their principal - so they play it safe.

But because conservative investments do not historically keep pace with inflation, "playing it safe" can actually be risky. Perhaps the best way to respond to this tendency is to engage in prudent asset allocation.

Asset allocation is the process of dividing investable assets into a number of different asset classes that collectively address your investment objectives, timelines and tolerance for risk.

Balancing investments among several asset classes may increase the chance that if the return on one investment is falling, the potential return of another might be rising. Asset allocation does not guarantee a profit or protect against a loss but over time, a thoughtful allocation of assets might outperform a conservatively invested portfolio.

Now, having said this when we are experiencing the volatility in the market, the timing is very good to consider lifetime income riders of variable annuities that can prove of value for some portion of your retirement plans.

In addition to offering diversified lifestyle portfolios with complete asset mix for your risk tolerance, the income rider protects your invested principal, provides minimum growth potential for deferred income and step-ups of market value locked in for your future income guaranteed that you and your spouse cannot outlive.

If this is of interest to you in your retirement plans, consult with your advisor to evaluate this option.

Remember, investigate thoroughly as variable annuities and the income riders vary in benefit, rider description and costs.

Jim Lentini is president of Lentini Insurance & Investments, Inc., located in Santa Clarita. His column reflects his own views and not necessarily those of The Signal.


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